Trading Desk Market Update: 1/21

January 21, 2022

BTC is currently trading around $38,400 and ETH around $2,800.  Stablecoins are the best performing crypto assets over the last 24 hours.  The global crypto market cap is $1.9T, down 10.3% over the last day.  DeFi Total Value Locked is ~$216b and BTC dominance is around 41%.

Bitcoin bled overnight and fell as low as $37,885 a bit over an hour ago.  With seemingly no single major catalyst, many are pointing to falling risk asset prices and particularly poor tech stock performance to start the year and over the last day with NFLX down 21% premarket.  Others have pinned it on continued concerns around monetary policy accommodation removal, a downside break below $40,000, and rumors that Raoul Pal has sold all but one of his bitcoin. In sum, over $900m in total liquidations have occurred over the last 24 hours. 

Elsewhere, the Federal Reserve released its highly anticipated discussion paper on a potential US CBDC yesterday. Though the paper stated it “does not favor any policy outcome,” it did review the pros and cons of issuing a CBDC.  The Fed concluded that a CBDC could provide a safe digital payment option for households and businesses as the payments system continues to evolve and may result in faster payment options between countries, but that it would also introduce risks, such as those around monetary and financial stability.  The Fed has now opened up a 120 day comment period with questions for the public around benefits, risks, design, and policy considerations.  

Also yesterday, the US congress heard testimony on crypto mining, where witnesses presented and members of congress debated topics like the renewables usage and less energy-intensive consensus mechanisms.  The hearing was generally characterized as moderate, with seemingly little political momentum behind a proper crackdown.  It remains unclear how congress plans to follow up on the hearing. 

Other notable news includes: Robinhood has launched a beta version of its crypto wallet, and Twitter is rolling out iOS support for NFTs starting with paid Twitter Blue subscribers.

This material is a product of the GSR Sales and Trading Department. It is not a product of a Research Department, not a research report, and not subject to all of the independence and disclosure standards applicable to research reports prepared pursuant to FINRA or CFTC research rules. This material is not independent of the Firm’s proprietary interests, which may conflict with your interests. The Firm trades instruments discussed in this material for its own account. The author may have consulted with the Firm’s traders and other personnel, who may have already traded based on the views expressed in this material, may trade contrary to the views expressed in this material, and may have positions in other instruments discussed herein. This material is intended only for institutional investors. Solely for purposes of the CFTC’s rules and to the extent this material discusses derivatives, this material is a solicitation for entering into a derivatives transaction and should not be considered to be a derivatives research report.This material is provided solely for informational purposes, is intended for your use only and does not constitute an offer or commitment, a solicitation of an offer or comment (except as noted for CFTC purposes), or any advice or recommendation, to enter into or conclude any transaction (whether on the indicative terms shown or otherwise), or to provide investment services in any state or country where such an offer or solicitation or provision would be illegal. Information is based on sources considered to be reliable, but not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of the date of publication, and are subject to change without notice. Trading and investing in digital assets involves significant risks including price volatility and illiquidity and may not be suitable for all investors. GSR will not be liable whatsoever for any direct or consequential loss arising from the use of this Information. Copyright of this Information belongs to GSR. Neither this Information nor any copy thereof may be taken or rented or redistributed, directly or indirectly, without prior written permission of GSR. Not a solicitation to U.S. Entities or individuals for securities in any form. If you are such an entity, you must close this page.